The Nigerian SEC has introduced new amendments to digital asset regulations, including a special compliance program for VASPs. Discover the details and implications for the Nigerian crypto market.
The Nigerian Securities and Exchange Commission (SEC) has recently amended its rules on Digital Asset Issuance, Offering Platforms, Exchange, and Custody. In a public notice, the SEC outlined its updated regulations aimed at creating a more comprehensive and responsive regulatory environment for digital asset markets.
Regulatory Overhaul and the ARIP
As part of this regulatory update, the SEC introduced the Accelerated Regulatory Incubation Programme (ARIP), a special compliance program designed for virtual asset service providers (VASPs). The ARIP provides a structured path for VASPs to align with the new regulatory requirements, ensuring they operate within the legal framework set by the SEC.
The SEC has established a special window for the onboarding process, allowing VASPs to participate in the ARIP through the SEC’s ePortal. This application process, aimed at improving compliance, must be completed within 30 days from the circular date. The SEC has emphasized that any non-compliant VASPs will face regulatory actions, underscoring the importance of adherence to the new directives.
The Amendment Process
The recent amendments are part of a broader effort to enhance the regulatory landscape for digital assets in Nigeria. These changes follow the appointment of Emomotimi Agama as the new Director-General of the SEC. Agama’s leadership has been pivotal in driving these updates, reflecting a commitment to regulating the virtual assets industry responsibly rather than enforcing clampdowns and shutdowns.
In March, the SEC proposed an amendment to the rules guiding platforms offering crypto services, suggesting a significant increase in the registration fee for crypto exchanges from 30 million naira ($18,620) to 150 million naira ($93,000). This proposal indicates the SEC’s intent to enforce stricter compliance measures and ensure that only serious and well-capitalized players participate in the market.
Nigeria's Crypto Market Landscape
Nigeria has emerged as one of the fastest-growing crypto economies in recent years. In 2023, the country ranked as the second-biggest economy in terms of crypto adoption. Furthermore, in August 2022, Nigeria was named the most crypto-obsessed country globally, based on the number of Google searches for terms like “cryptocurrency” and “buy crypto.”
This rapid growth has highlighted the need for robust regulatory frameworks to ensure market stability and protect investors. The SEC's recent amendments and the introduction of the ARIP are steps toward achieving these goals, positioning Nigeria as a leader in the regulated crypto market.
Implications for VASPs and the Market
The introduction of the ARIP and the updated regulatory framework present both challenges and opportunities for VASPs in Nigeria. While the compliance requirements are stringent, they also provide a clear pathway for legal operation, which can enhance market confidence and attract more significant investments.
Conforming to the new rules will require VASPs to navigate the SEC’s ePortal application process within the stipulated 30-day period. The SEC’s stern warning about enforcing regulatory actions against non-compliant VASPs further underscores the importance of timely and thorough compliance.
Future Outlook
The SEC's move to amend digital asset regulations and introduce the ARIP reflects a proactive approach to managing the evolving crypto market. By fostering a regulatory environment that balances oversight with growth, Nigeria can continue to lead in crypto adoption while ensuring market integrity and investor protection.
As the Nigerian crypto market continues to grow, the role of regulatory bodies like the SEC will be crucial in shaping its future. The recent amendments are a positive step toward creating a sustainable and secure market for digital assets in Nigeria.
The Nigerian SEC’s amendments to digital asset regulations and the launch of the ARIP represent significant strides toward improving compliance and regulatory oversight in the crypto market. These changes are expected to enhance market stability, protect investors, and ensure that Nigeria remains at the forefront of global crypto adoption. As VASPs navigate these new regulations, the broader market will likely see increased confidence and investment, driving further growth and innovation in the Nigerian crypto economy.
(DANIEL RAMIREZ-ESCUDERO, COINTELEGRAPH, 2024)